Identity Crisis

Condo owners face "commercial" fees

Just when the Brickell Homeowners Association seemed to be making headway with the notion that City residentswhether living in condos or single-family dwellingsshould be treated equally since they contribute to the tax base at the same rate, the Miami City Commission likened condo associations to commercial enterprises. The result is that condo associations throughout the City of Miami are finding themselves included in the latest revenue-generating fee enacted by the commission: the "Supplemental Waste Fee."

The Commission passed the ordinance March 31 assessing a supplemental waste fee on "commercial establishments," payable May 31st. According to the wording of the ordinance, condominium associations are considered commercial establishments, and the City mailed invoices for the fee of $5 per unit to about half the membership of the BHA.

Upon learning that the City was characterizing condominium associations as commercial establishments, the BHA protested vigorously, including an appearance before the Commission in late May. Finally the BHA prevailed upon Commissioner Plummer to introduce an ordinance correcting the misnomer which was passed four to one on first reading by the Commission in late July. The second reading is scheduled for September 8, the next regularly scheduled Commission meeting. If it passes on second reading, it becomes effective in 30 days and refunds of fees paid would be expected.

The big unknown at this time is action by the Governor's Financial Oversight Board. With news nearly every day of how the Oversight Board is getting tougher and impatient with the City, the pressure increases on Commissioners looking for new revenue every place possible.

If the Board does not interfere, BHA leaders hope that reason will prevail and the City will give final approval to recognizing that condominiums associations are not commercial enterprises.

(See Letter to the Governor's Financial Oversight Board, and Commissioner Tomas Regalado's response.)

The Miami Herald is calling for commissioners "Face Up to Reality" and "Do What It Takes" in its editorials, including raising garbage-collection fees to reflect actual costs and curb expenses.

In Tony Doris's "Good Morning" column in the Miami Daily Business Review on August 10th, Mr. Doris suggested that "Maybe the little people out there can help the clueless officials come up with some cost-cutting ideas." He credited BHA ally, TTUFF (Tenants and Taxpayers United For Fairness), along with the Brickell Homeowners Association"Brickell condo commandos that have always been a tough crowd"with a list of suggestions for fixing the City's budget woes. Mr. Doris does not necessarily endorse these ideas, but said he did endorse the idea of "putting such suggestions in the public domain and obligating people in positions of authority to respond."

Here's the list reprinted with the permission of Miami Daily Business Review.

• n Eliminate overtime, unless there's a national emergency.
• n Raise the garbage collection fee to cover the true cost rather than subsidizing the service.
• n Lease capital equipment and vehicles, such as fire trucks, rather than purchasing them.
• n Minimize out-of-town trips for elected officials and city employees.
• n Put a cap on allowances for cars, cellular phones, laptop computers and special insurance benefits.
• n Limit staff, such as body guards, for mayor and other officials.
• n Don't allow police or other city employees to take pool vehicles home, so that one car can serve three shifts.
• n Economy cars for all officials who get cars, not including police.
• n Minimize use of outside counsel and consultants, and where outside counsel is a must, negotiate flat rates rather than hourly.
• n Account for every dime spent by making easily accessible to the public a readable list of all disbursements made from city coffers. n

A Letter from BHA to the Governor's Financial Oversight Board

August 3, 1998

Dear Board Members,

The City Commission on July 21st passed an ordinance exempting residential condominiums and residential condominium associations from the assessment of supplemental waste fees.

The following morning at the Financial Oversight Board meeting, there was a comment to the effect that this action represented another example of the Commission not being firm in its revenue generation commitments and succumbing to voter pressure.

Actually, this is not the case at all. The Commission was correcting an inadvertent mistake in a previous ordinance that levied this assessment on COMMERCIAL establishments and, obviously, condominiums and condominium associations are not "commercial establishments."

Single-family residential entities whether juxtaposed horizontally or vertically must be treated equally with regard to taxes and assessments. Residential condominiums are a significant segment of the City's residential ad valorem tax base and are subject to the homestead exemption which is, of course, not available to residents in commercial, multifamily properties.

It should be noted that residential condominiums currently benefit from the City's public right-of-way cleaning services to no greater extent than do residents of single-family, unattached housing.

It is arbitrary and fallacious to characterize residential condominiums and condominium associations as commercial. These entities are not operated for profit and thus, by definition, are not commercial establishments.

We respectfully request that the Board take no action that would impede the City Commission's passage of this corrective ordinance at the scheduled second reading on September 8th. This is a matter of fairness and conformity with Noah Webster, far more than it is one of revenue.

Sincerely,

T. Sinclair (Tory) Jacobs
President

cc: Governor's Financial Oversight Board; Mayor Joe Carollo; Commissioner J.L. Plummer, Jr.; Commissioner Joe Sanchez; Commissioner Willy Gort; Commissioner Tomas Regalado; Commissioner Arthur E. Teele; City Manager Donald Warshaw; Miami Herald Editorial Board

Candidates Forum Set for August 27

In an effort to help residents learn about candidates and issues prior to voting, every year the Brickell Homeowners Association in partnership with the Miami Roads Neighborhood Civic Association hosts a Candidates Forum. This year's event on Thursday, August 27, 1998, will provide an opportunity for residents to hear from candidates, learn about where they stand on issues and ask them questions about their views.

The polls will be open three times for elections this fall: September 1, October 1 and November 3. The Brickell Homeowners Association does not have any local seats up for election (county or city commissioners), however, the governor, state and federal representatives and senators and judges will be on the ballots.

BHA neighbors in the Miami Roads area will have an important election for their Miami City Commissioner in district, #3. Roads resident and current Commissioner Joe Sanchez, who has served as commissioner for the past several weeks since Humberto Hernandez was removed, is so far running unopposed in the November 3 election. The deadline for qualifying for that race is September 19.

Joe Wilkins, leader of the Miami Roads group and cochair of this year's Candidates Forum, said he hopes for an even better turnout this year.

The Immanuel Lutheran Church, 1770 Brickell Ave., will provide their hall to host the Candidates Forum, which begins at 7 p.m.

Polling Locations

Those in precinct 541 have a new polling locationthe Sheraton Biscayne Bay on Brickell Point, 495 Brickell Ave., graciously provided by the Sheraton Manager, Mr. John Marks. The Sheraton will provide complimentary parking with voting validation. Precinct 569's polling place at UTD Towers, 1809 Brickell Ave., remains the same.

President's Column

By T. Sinclair (Tory) Jacobs

Do we know who we are? Does the City of Miami know who we are? What difference does it really make?

_T he recently enacted Supplemental Waste Fee assessed against
commercial establishments erroneously included condominium associations. When we brought this mistake to the attention of Commissioner Plummer, J.L. sponsored a remedial ordinance which passed on first reading four to one. However, its passage at the second reading scheduled for September 8th is at risk because of potential intervention by the Governor's Financial Oversight Board.

Currently, the dollars involved amount to some $5.00 per condominium unit annually. Far more critical than the immediate financial burden is recognition of the condominium community as part of the City's residential tax (and fee) base, rather than part of the City's commercial tax base.

Residents are empowered primarily by their right to vote. Commercial establishments are empowered not so much by owners' voting rights as by their contributions to candidates' election campaigns and employment of lobbyists. Commercial establishments have the opportunity to pass increased in taxes and fees on to customers. Residents do not have this pass-along opportunity.

We know condominiums and condominium associations are part of Miami's residential tax base. We must be sure the City recognizes this verity.

It can make a big difference to our future financial well-being.

Note: Our letter to the Oversight Board is reprinted on page 6.

Security Conference Planned

The BHA, working with the Miami City Police and Fire Departments, is planning a Security Seminar on September 24, 1998, for management and security personnel from BHA member condominiums. Coordinated by BHA Secretary Mac Seligman, the session will include information about crime and fire safety, emergency procedures and communications.

Would You Knowingly Overpay Your Income Taxes? Why Overpay Property Taxes? 12 Points For Condo Owners.

By Sheila Anderson

Taking income tax reductions is as American as apple pie. Taxpayers have the right to pay the lowest taxes permitted by law. In fact, most people recognize their net worth is protected by the tax deduction process.

Similar principles of taxpayer protections apply to property. Every state has a system whereby owners and their agents can make sure allowable deductions are considered and applied to their ad valorem tax assessment. Florida's system is available to every owner annually. The following points represent what Florida condominium owners should know.

• 1. Florida's Constitution requires that ad valorem property taxes be assessed according to "just value." Just value means market value LESS adjustments made for conditions specified under Florida law.
• 2. Florida property taxes, assessed in arrears, are applied to land, to improvements (i.e., buildings), and tangible personal (business) property. Applicable information for specific parcels of land and improvements thereon appear on the same TRIM (Truth In Millage) Preliminary Notices and Tax Bills, although land and improvements are analyzed separately.
• 3. Because Florida's tax assessment process is an annual event and there are so many tax parcels (more than 700,000 in Miami-Dade), a Mass Appraisal system generally is used. This means certain broad assumptions are applied through statistical analysis to most properties within a certain classification of land use or within a specified physical location. The general nature of mass appraising means conditions affecting just values may not be known or not be considered properly when applied to specific property.
• 4. Therefore, Florida uses a Value Adjustment Board (VAB) administrative process so every owner may appeal his or her ad valorem taxes every year to make sure every allowable deduction has been considered properly. (For the 1997 taxable year, even the City of Miami used the VAB to appeal the ad valorem taxes on municipally owned real estate.)
• 5. To provide owners this opportunity to exercise their rights, usually in the third week in August, each Miami-Dade property owner will be mailed a TRIM or Preliminary Notice.

THIS CRITICAL "TRIM" DOCUMENT IS LEGAL NOTICE GIVING OWNERS AND THEIR AGENTS 25 CALENDAR DAYS TO FILE A PETITION FOR A VALUE ADJUSTMENT BOARD (VAB) HEARING.

At the end of the 25-day period, the filing period ends for the calendar year, and the corresponding right to request a hearing expires.

• 6. A petition is a legal form requesting a hearing before a Special Master. Once filed and accepted, the County's VAB will schedule a hearing, usually several months later.
• 7. At a VAB hearing, the property owner or agent and government appraiser may present evidence to demonstrate whether the just value is correct. Miami-Dade uses Special Masters who are certified appraisers who preside at value hearings. These Masters may recommend "no change" or a "reduction" which may result in lowered property taxes.
• 8. The cost of filing a petition is $15 per individual folio number. Subdivided land and/or groups of condominium units (at the same address) may file at $5 per individual folio number.
• 9. If any hearing before a Special Master ends with a recommendation to lower the just value, and if a reduction in taxes
• is the result, a credit against unpaid ad valorem taxes or a refund of taxes paid for the applicable year is granted to the taxpayer. (If the outcome of a VAB hearing is not acceptable, the parties may appeal to Circuit Court.)
• 10. Evidence presented at hearings for condominiums includes several types of research and calculations. Adjusted Market or Comparable Sales Approach data and Replacement Approach data are the most customary. Income Approach data more typically is applied to commercial property, but sometimes this factor may affect condominiums too.
• 11.Arms Length Transactions must be used for the Comparable Sales Approach, and certain case law decisions affect adjustments to calculate just values. Other conditions, such as special assessments and other fees levied by governments, also may have a "just value" impact on condominium apartments.
• 12. Replacement Approach involves construction costs and conditions involving repairs. Precedents exist where special assessments levied by an association are applicable. Examples might be the impact of code enforcement criteria mandated by government as well as other capital improvements.

The Bottom Line

Florida condominium associations and individual owners have the constitutional right and annual opportunity to apply for Hearings on ad valorem property taxes. Failing to do so means a risk of overpaying property taxes and reducing net profit on future sale. Current or future sales based on market values are not affected or influenced by the use of the VAB process, but owners' present and future returns on investment are. n

Sheila M. Anderson is President of Commercial Property Services, Inc., a licensed real estate brokerage corporation which serves as a property tax agent for institutional, corporate, and individual property owners throughout Florida. Mrs. Anderson has testified before the Governor's Ad Valorem Task Force and Florida Representative Bob Stark's Tax and Finance Committee Workshop. Presently, she serves on the Department of Revenue's Real Property Guidelines Workgroup.

The opinions contained herein are those of the author and do not necessarily reflect viewpoints held by the BHA. Readers are invited to send in their comments related to the neighborhood or condominium living that may be of interest to Brickell residents. Please mail your inquiries to the address on the back page or fax to the Editor: (305) 446-5491.

Putting Names with Faces

The block party at Simpson Park on August 3, 1998, organized by the Miami Roads Neighborhood Civic Association gave residents of the Roads and Brickell a chance to get together, enjoy hotdogs and meet new neighbors. Several public officials and city staff who are of vital assistance to the Brickell Homeowners Association were on hand for the occasion. We took some snapshots to help you match the names you read about with their faces. n